The determination of the taxpayers’ rating is carried out according to specific criteria in several sequential selection steps using the exclusion method, i.e., companies included in any of the rating classes are no longer evaluated in subsequent selection steps. A company can receive one out of five such rating evaluations.
J – newly registered taxpayer
- Companies registered no earlier than 6 months before the rating determination date
The risks identified for these companies are not taken into account in determining the rating, however the company can familiarize itself with the existing risks that may affect the taxpayer rating in the future in the “Indicators” Taxpayer Rating section of their EDS profile.
- Companies registered after the rating determination date
For these companies, the rating determination date will be the company's registration date. No risk assessment is carried out, and detailed information about the taxpayer rating is not available in the EDS.
N - inactive taxpayer
Companies that do not engage in active economic activities according to the data available to the SRS. In the SRS assessment, these are the companies whose total declared tax amount for the last six months, as stated in the submitted declarations and reports, does not exceed EUR 750 and meet at least one of the following criteria groups:
- Companies are excluded from the SRS's VAT payer register due to not conducting economic activities.
- Companies meet all the following criteria at once:
- no declared work income.
- tax payments to the state budget have not been made, or their total amount does not exceed EUR 150.
- The total value of transactions declared in VAT returns for the assessed period does not exceed EUR 750 (for members of VAT groups, the total amount of declared transactions for supplies of goods and services domestically and within the territory of the European Union (EU), as well as export transactions is assessed).
The information available to the SRS regarding the economic activity of these companies is also evaluated, which should result in tax obligations according to the SRS. These companies can familiarize themselves with it in their profile in the EDS Taxpayer Rating section “Indicators” ® “Tax Declaration Risk Assessment”.
Other risks identified for these companies are not taken into account in the rating determination.
C – Compliance violations
- Companies for which the SRS has decided to suspend their economic activity.
- Companies that have been excluded by the SRS from the SRS’s VAT payer register due to violations detected in the field of tax compliance and whose registration in the SRS’s VAT payer register has not been renewed.
Although other risks identified for these companies are not taken into account in determining the rating, the company can review them in their profile in the EDS Taxpayer Rating section "Indicators".
B – Compliance needs to be improved.
Companies that do not meet the J, N or C rating criteria and have significant tax compliance risks in one of the areas assessed by the SRS..
- Companies that have one or more significant risks in the field of tax compliance:
- there is a tax debt that exceeds EUR 150 at the end of the previous month and the ratio of the tax debt to the tax contributions made indicates the risks of non-payment of the tax debt.
- at least one of the risks in the salary payment assessment has been identified:
The information on employees who have not received wages in a specific month, such as those on extended leave, is not used in calculating the company's average wages and salaries.
- Comparison of the wage and salary level:
- Non-declaration of employees and wages and salaries:
- economic activity is carried out (the total transaction value is declared in the taxpayer's VAT declarations), but the mandatory state social insurance contributions are not declared in employer’s reports.
- "employer reports" have not been submitted or employees with income have not been declared in the "employer's reports", although:
- employees worked at the construction site (data from the Unified Electronic Working Time Record Database).
- employees carried out passenger commercial transport with a passenger car or taxi (data from the website or mobile app service providers).
- at the employer’s request, at least three foreigners have been granted the right to employment (data from the Office of Citizenship and Migration Affairs).
- at least one of the VAT risks used in determining the rating has been identified:
- after the transaction is completed, counterparties are excluded from the SRS’s VAT register at the initiative of the SRS – such transactions are deemed as transactions with risky counterparties who have been found to commit tax violations.
- the declared amount of VAT payable to the budget indicates potential VAT losses - the nature of the transactions declared in the taxpayer's VAT declarations suggests that the taxpayer's transactions are mostly carried out within the territory of Latvia, but as a result, the amount of VAT payable to the budget is minimal.
- the amounts of declared EU acquisitions and EU supplies indicate potential VAT losses - the largest share of transactions declared by the taxpayer in the VAT declaration consists of intra-EU acquisitions and deliveries to EU member states, which may indicate the provision of potential intermediary functions to taxpayers from other EU member states involved in the chain of transactions.
- deliveries of goods or services provided are not declared, although Latvian counterparties have declared purchases of goods or services received.
- the VAT refundable to the budget has been declared for this and at least the two preceding years, but no or minimal supply of goods or services has been declared.
- no more than two tax returns and/or reports have been filed.
- no annual report for the last fiscal year has been submitted.
- no bank accounts declared.
- the initiated process of exclusion from the SRS’s VAT register was interrupted more than twice.
- the transfer of the company has been determined.
- as a result of the tax audit and/or tax inspection the calculated additional tax amount payable to the budget exceeds 10% of the company's state budget tax payments.
- as a result of the customs declarations inspection, the calculated additional tax amount payable to the budget exceeds the company's state budget tax payments.
- as a result of tax inspection or other measures for the administration of taxes, administrative penalties have been imposed for established significant violations in the field of taxation or customs.
- average wages and salaries do not reach 25% of the average wages and salaries in the country’s private sector (compared to the CSB data on the average monthly gross wages and salaries in the country in the first quarter of 2024: https://data.stat.gov.lv/pxweb/lv/OSP_PUB/START__EMP__DS__DSV/DSV010c)
- a decision has been made regarding the imposition of a fine for non-submission of transfer pricing documentation.
- the company or its official is subject to international or national sanctions.
- the status of Authorized Economic Operator (AEO) in customs has been revoked due to the identified violations.
- tax debt collection activities have been carried out.
- other risks identified for the company or official not mentioned above.
The company can review all the identified risks, as well as more detailed information, such as the period for which the risk is assessed, in their EDS profile in the Taxpayer Rating section "Indicators".
- Companies with signs of significant tax non-declaration risks.
According to their own declared information, companies do not carry out active economic activity, but according to the information available to the SRS, there are signs indicating significant risks of non-declaration of taxes. In the SRS assessment, these are such companies for which the total amount of taxes calculated for the contribution to the state budget declared in the submitted declarations and reports for the last six months does not exceed EUR 750 and at least one of the following groups of criteria is fulfilled:
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- companies are excluded from the SRS VAT payer register due to the fact that they do not carry out economic activity.
- companies meet the following criteria all at once:
- no declared income from work.
- no tax payments to the state budget have been made or their total amount does not exceed EUR 150.
- the total value of transactions declared in VAT returns for the assessed period does not exceed EUR 750 (for members of VAT groups, the total amount of declared transactions for supplies of goods and services domestically and within the territory of the European Union (EU), as well as export transactions, is assessed).
And for these companies, at least one of the signs indicating significant risks of non-declaration of taxes has been identified:
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- Latvian counterparties have declared purchases of goods or services received from the company, and the total value of these declared transactions excluding VAT is more than EUR 750.
- the amount of input tax declared in VAT returns is more than EUR 150.
- discrepancies have been identified in transactions with EU companies.
- the declared total value of the exported or imported goods is more than EUR 750.
- according to the employee information submitted, there are current employees, but no employer reports have been submitted.
- employer's reports have not been submitted or no employees with salary have been declared in the employer's reports, although the employees worked at the construction site (data from the Unified Electronic Work Time Logging Database)
- at the request of the company, at least one third-country national has been granted the right to employment (data from the Office of Citizenship and Migration Affairs).
- income from the carriage of passengers by passenger car or taxi is earned (data provided by the website or mobile application service providers)
The other risks identified for these companies are not taken into account in the rating determination. The company can review all the identified risks in their EDS profile in the Taxpayer Rating section "Indicators".
- Companies that have declared bankruptcy.
Other risks identified for these companies are not taken into account in the rating determination. The company can review the identified risks in their EDS profile in the Taxpayer Rating section “Indicators”.
A – Good compliance.
Companies that have good tax compliance, without significant risks in tax compliance, and that do not meet the criteria for ratings B, C, N and J.
The company can review the identified relatively insignificant risks in their EDS profile in the Taxpayer Rating section "Indicators".
It should be noted that the SRS may also have other risk information about the taxpayer at its disposal, including information characterizing a separate indicator, the disclosure of which to the taxpayer is prohibited for the SRS by national and international regulatory enactments, but it is not used to determine the publicly available rating assessment and does not affect the taxpayer's rating.
It should be taken into account that the SRS will continue to use this information in tax administration measures for all taxpayers, regardless of the overall assessment of the taxpayer's rating.
